Disability insurance contracts are loaded with provisions, definitions, descriptions, and limitations. Policies attempt to spell out the various ways you will and won’t be eligible to receive benefits, and how much you would be entitled to.
In addition to the major provisions, your disability insurance policy will likely contain a list of ancillary benefits. While these smaller benefits are not as critical to a policy as other provisions — own-occupation, residual disability — they can provide added value. At the very least, you should know what is and isn’t contained in your policy.
Below are a list of common benefits you may find in a physicians disability insurance policy, either as part of the base policy or available as a rider.
In addition to replacing your salary income, carriers may also have provisions that replace some of the employee benefits you lose by being unable to work, such as:
Retirement Protection Benefit. Several carriers will pay benefits designed to replace the contributions you would make to a qualified retirement plan were you still working. While you are receiving benefits, separate contributions are placed by the insurer in a trust and invested, just as they would be in a requirement plan. Once you reach a certain retirement age, the trust will begin paying out retirement income.
COBRA Premium Benefit. Your policy may include a provision that would reimburse you for premiums paid to continue medical insurance coverage after a disability. Contract language usually states that if you become unemployed due to disability, and receive benefits from your disability insurance policy, you will receive an additional benefit to continue COBRA premiums.
Your policy may contain one or more of these provisions that could provide an added benefit above your disability payment or an accelerated payment:
Hospice Care Benefit. A few disability insurers include this benefit, which waives the elimination period and begins paying benefits immediately if you are placed in hospice or palliative care.
Student Loan Protection. Some policies will provide an additional benefit, either automatically included or as an optional rider, that will specifically address student loan debt. Some will cover your student loan payments while your are totally disabled up to a maximum period. Others will pay off the balance of your student loans provided you are permanently disabled prior to a specified age. These benefits are typically paid directly to the lender.
Substitute Salary Expense Rider. This rider will help reimburse expenses for employing somebody to perform the duties that the disabled person can no longer perform. Benefits amount is capped, as is the benefit period.
Survivor benefit. If you die while still receiving disability insurance benefits, a contract with this provision will continue making payments to an eligible survivor, such as a spouse or dependent.
Some disability insurance provisions are specifically designed to pay an additional benefit, accelerate payment of benefits, or clarify eligibility for benefits for certain types of injuries and illnesses. Examples include:
Surgical transplants and cosmetic surgery. A few insurers include a provision whereby if total disability results from transplanting part of your body to another person, you will be considered total disability and be eligible for benefits. Your policy may waive the elimination period in this scenario.
These policies also usually have a cosmetic surgery provision that works the same way; if a disability results from cosmetic surgery, the insurer will consider you totally disabled.
These provisions may not be available until after the policy has been issued for a certain period of time, such as six months.
Serious Illness Supplemental Benefit. If your policy has this provision, it may provide an additional benefit if your disability is the result of cancer, stroke or heart attack. For example, Guardian pays a benefit equal to 50 percent of the monthly benefit for a maximum of 12 months.
Treatment of Non-Disabling Injuries. Some policies will pay for medical or dental treatment resulting from an injury that does not lead to total or residual disability.
Capital Sum Benefit Rider. This rider provides a one-time payment to help you financially adjust to an injury that causes a permanent loss of sight in one eye or use of a hand or foot. The payment is over and above your normal disability benefits.
HIV Rider. MassMutual offers this rider only to health care professionals. It provides a monthly benefit if the insured tests positive for HIV, regardless of whether the insured is working or how the virus was contracted.
Joel Palmer is a writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.